Ch2

Question 1

Correction of error (examples: failed to accrue warranty costs)

Answer 1

restate all prior (retroative)

Question 2

Change in entity

Answer 2

restate all prior (retroactive)

Question 3

Change in estimate (exceptions: Depreciation (estimate & principal , but count as estimate)(exception2: change to LIFO: count as estimate)

Answer 3

Restate all prior periods in beg balance of RE(‘s adjustments) to prior periods (retroactive)
& if inventory costing method: (cumulative effect of change)
LIFO: adj beg inventory in comparative stmt presented with offset adjustmt to beg year 2 RE

Question 4

Change in principal

Answer 4

Report as component of income from continuing operations (prospectively)